Soros reveals stake in Manchester United

August 20, 2012|Katya Wachtel and Olivia Oran | Reuters

(Arnd Wiegmann Reuters, REUTERS)

NEW YORK (Reuters) - Billionaire money manager George Soros reported a nearly 2 percent stake in Manchester United Plc on Monday, in one of the first revelations of investors in the British football club's controversial initial public offering earlier this month.

The veteran investor's eponymous hedge fund, Soros Fund Management LLC, owns 7.85 percent of Manchester United's Class A shares, or about 1.9 percent of the entire club, according to a filing with the U.S. Securities and Exchange Commission.

Manchester United, which went public on August 9, priced below its expected range amid broad scepticism about the valuation the club's owners wanted. It also made the identity of the eventual shareholders a matter of particular interest for other institutional investors.

The club is owned by the Glazer family, which has interests ranging from shopping malls to the Tampa Bay Buccaneers football team.

Soros is one of the closely watched investors in the $2 trillion hedge fund industry, and oversees about $25 billion in assets, even after returning money to outside investors and converting his fund into a family office last summer. The firm now mainly manages money for Soros, his family and his foundation.

This is not the first time that the 82-year-old money manager has taken interest in a football club. In 2008, the billionaire eyed a takeover of Italian club AS Roma as the team struggled with debt issues but later decided against it.

Soros was likely drawn to Manchester United because of the team's lucrative media rights deals, said Philip Hall, a partner at New York-based investment bank Inner Circle Sports which has advised on high-profile English Premier League takeovers including Fenway Sports Group's acquisition of Liverpool.

"This could be a play by Soros on the strength of Manchester United's brand and the English Premier League's growing media rights," Hall said. "The domestic rights are set to increase 70 percent for the '13/'14 season and the international media rights, set to be announced in late October or early November, are also expected to come in at a very robust uplift."

Soros Fund Management did not immediately return a request for comment.

Soros' filing came after Manchester United lost its Premier League season opener on Monday against Everton. But the team said last week it had signed star striker Robin Van Persie from Arsenal.

Shares of Manchester United closed down 2.7 percent at $13.06 on Monday, after hitting a new low of $12.91 earlier in the day. They priced at $14 per share in the IPO.

VANITY PURCHASE?

Manchester's offering on the New York Stock Exchange raised just over $233 million. Only the Class A shares were offered in the IPO. Soros Fund Management bought 3,114,588 Class A shares in the team, according to the regulatory filing. The Class A shares carry one vote each, compared with 10 votes for every Class B share.

The Glazers, who purchased Manchester United for 790 million pounds ($1.2 billion) in 2005 in a highly levered deal, have kept control of the club after the IPO.

Manchester United fans have criticized the Glazers for over-levering the once debt-free team. The club's debt load stood at over 437 million pounds ($682 million) as of June 30.

"This seems like a vanity purchase. The stock was pitched to a lot of high net worth accounts and a lot of those people were interested in the stock for the same reason," said Sam Hamadeh, CEO of research firm PrivCo. "We don't believe Manchester United's shares are worth any more than mid-single digits and there doesn't seem to be any justification for what could eventually drive shares up."

Manchester United is not the only company struggling to boost its share price after a public offering, which has caught Soros's attention. A recent quarterly regulatory filing revealed that he had bet on social networking giant Facebook Inc in the second quarter, which on Monday hit a new low of $18.75, more than 50 percent below the price they were issued at in May. However, the stock did end the day 2.3 percent higher at $19.48.